It should be stressed that every country is different. In general, though, the problem with economic development is that it does not trump politics. The countries of the region can be divided into those that have oil wealth and those that don’t. The wealthy countries don’t need American programs to engage in economic development. In some cases, radicalism and instability keep getting in the way. In others — think of Iran or Iraq under Saddam — economic development is managed within the framework of an extremist regime and ideology.
It is true that the wealth of Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates has made them more cautious and — often in practice but not in rhetoric or domestic policy — more pragmatic. But one must be cautious here. Saudi Arabia’s wealth and the high living standards of many of its citizens have not made the country a paragon of democratic values at home and moderation abroad.
Saudi money has been used to spread Islamism and to back radical Islamists, most notably in contemporary Syria and in Iraq a few years ago. Qatar has aligned itself with Iran and the Muslim Brotherhood, engaging in mischief as far afield as Libya. Iraq and Algeria need stability but the problem is not economic development as such but merely pumping more oil and doing something about bureaucracy and corruption.
Certainly, though, these countries do not need Western governments to promote economic development.
Radical regimes, like Libya under Muammar al-Qaddafi, Iraq under Saddam Hussein, or Islamist Iran, use some of their wealth for development and much of it for projects like building nuclear weapons and subverting their neighbors.
So regarding the wealthy countries, there isn’t much for the West to do in promoting economic development. What about the non-oil states? Let’s look at the specific cases. Lebanon, famous for its merchants, had a self-made multi-millionaire as prime minister who focused on economic development. But he was forced out and assassinated. Internal conflict, ideology, and engagement in foreign adventures wrecked the chance for economic development.
The same applies even more to the Hamas regime in the Gaza Strip, which is more interested in fighting Israel than in raising living standards. How can the West help when the local impetus is lacking?
This brings us to Egypt. The truth is that Egypt has a lot of people but few resources and a terrible structural and cultural situation regarding work. Here’s one example. A leading British supermarket chain opened stores in Egypt. Traditionalists, radicals, and competitors (the owners of small stores) spread rumors that the supermarket company backed Israel and was anti-Muslim. Despite the store’s efforts at denial and appeasement, the pressure became so great that it had to close and leave the country.
In a Muslim Brotherhood-ruled Egypt, with Salafists engaging in anarchic violence, is U.S.-backed economic development going to make any differences? As for the Palestinian Authority, vast amounts of aid money have flowed in and despite some apparent successes — a lot of luxury apartments have been built and people kept employed in the government bureaucracy — no lasting progress has been made. A lot of the money has ended up in the political leaders’ foreign bank accounts. At any time, Hamas could take over or the Fatah-led regime turn back to a war against Israel.
Economic development sounds good, but in practice it is more a way to keep Western citizens happy than to make a real difference in the Middle East.